Malta fab project to begin Monday

GlobalFoundries Inc. will begin clearing a 222-acre site at Luther Forest Technology Campus on Monday for its $4.2 billion computer chip factory.

The Sunnyvale, Calif.-based company is scheduled to close on the sale of the land tomorrow so the work can begin.

Last week, GlobalFoundries negotiated a project labor agreement with construction unions and Gov. David Paterson that paved the way for the project to proceed.

The company had originally set March 17 as its target date to begin removing trees and moving earth at the site in Malta where it will build the facility. Luther Forest is a former logging forest that was also used by the military to test rocket technology.

Today, GlobalFoundries will also deliver its official commitment letter for the project to Empire State Development Corp., the state’s economic development arm. GlobalFoundries had until July 31 to send the letter and be eligible for $650 million in cash for the project.

An official groundbreaking is scheduled for late July.

Rendering from GlobalFoundries shows what the 222-acre site in Malta would look like with three chip-fab plants. The company has committed so far to building one.

The chip fab building itself will cost $800 million and take roughly two years to construct using about 1,600 workers.

The facility is expected to reach full production in 2012, when all of the manufacturing equipment is installed and qualified for use.

The Luther Forest project was first announced by state officials in June 2006. At that time, the project was proposed by Advanced Micro Devices Inc. Since then, AMD has spun off its manufacturing into what is now GlobalFoundries with investment from the Emirate of Abu Dhabi.

The state committed $1.2 billion to the project, which includes the $650 million in cash, plus tax incentives and infrastructure construction for the site.

Once the state receives the commitment letter today, ESDC will have to start a process in which it will begin issuing bonds to raise the money.

GlobalFoundries now will authorize its general contractor on the project, M+W Zander, to award the first contract for the site clearing. Equipment for site clearing, such as earth movers, will arrive at the site Monday for work. Until now, GlobalFoundries has not touched the site, which has space for up to three fabs.

Any estimates about when this company may finally reach profitability and get out of welfare?

It has been 12 quarters of consecutive losses so far, it is logical to ask if by 2012 Globalfoundries may be profitable, or is it planning to be posting losses for 24 or more quarters in a row? Is there any time table to terminate corporate welfare benefits to the AMD family?

Economic development based on sustained losses seems to be impossible, isn’t it?